By IJ News Service
OMAHA – Responding to a question at the Berkshire Hathaway shareholders meeting on May 1, 2010, Warren Buffett said he is planning a trip to India in March 2011.
Close to 40,000 enthusiastic shareholders made the pilgrimage to Omaha this year, coming from all over the world to attend “Woodstock for capitalists”.
One of them, Sabrina Chugh, 12, from Los Angeles asked Mr. Buffett, “why aren’t you investing in India?”
India and China are doing really well, and even though Berkshire has doesn’t have many investments outside of the U.S., we are getting interested to look at investment opportunities in India, Buffett said. He said that one of their investments ISCAR is doing business in India and doing very well.
One problem, he said, is that Indian laws limit how much Berkshire can invest in companies in the country. Still, Buffett said there is potential, noting that India has made big improvements in the past 10 years.
Then it was vice Chairman Charlie Munger to answer the question, and he said that the bureaucracy in India has created a government “paralysis” which makes it harder to invest in India. Buffett countered by saying that, “we kind of admire the democracy that causes the paralysis”.
Buffett said ‘we do not rule out India’ as a possible locale for future Berkshire investments, whether in companies or marketable securities, though bureaucratic obstacles could complicate any plans to invest, including limitations on foreign ownership.
He added that ‘we’ve looked a lot at being in the insurance business in India.’ Insurance and reinsurance are Berkshire’s main business lines. Demographers expect India to overtake China as the world’s most populous country within the next two decades, and Buffett predicted that ‘people in India will be living a lot better 20 years from now.’
Buffett also emphasized that countries around the world do learn from each other.
India and China are learning a lot from our proven ways here in the U.S., and they are also helping improve U.S.
Buffett and his vice chairman Munger answered a number of questions covering a broad range of issues, and picking a sample from more than 1,500 questions submitted to them in a Q&A session that lasted eight hours.
The topics ranged from Goldman Sachs, to financial reform, to budget deficits, to capitalism, to inflation, to Kraft Foods buying Cadbury, to China, and to succession.
Sabrina Chugh, a U.S. citizen and a sixth grader at Laguna Elementary in Fullerton, says she has been investing in the stock market since she was eight years old and is a huge fan of Warren Buffett.
“Yes I was very nervous standing in front of 30,000 people with the light shining on me, but I thought now that I have won the lottery to ask a question, I might as well ask a question about my favorite country India,” Sabrina told a reporter.
When asked by a reporter, if she was happy with Mr. Buffett’s answer to her question, Sabrina seemed elated, “I am so surprised that he said he will go to India and they spoke for more than ten minutes about India.” And she added, “One cool thing was that Bill Gates was sitting in front of me!”
The text of Sabrina’s full question was, “Good Morning Warren and Charlie Uncle. I have to call you “Uncle” because my parents are from India, and we have to call anybody older than us Uncle or Auntie. I am Sabrina Chugh from Los Angeles, and I am 12 years old. My mom owns a bunch of Berkies, which obviously I am going to get one day. My question to you is, 17 percent of the world is Indian. That’s one out of six people in the world. India’s economy has been growing at 7 to 8 percent per year. At this rate it will surpass U.S. GDP in 2043. Can you please tell me, why aren’t you investing in India?”
Mr. Buffett interrupted Sabrina’s question and said, “You can call me Grand Uncle”.